Failure

Models of FailureEngineering model: FMEA (Failure Modes & Effects Analysis)

Disease model: Collins “How the Mighty Fall”

Innovation Driven: Innovator’s Dilemma

Scenario based planning

Aviation Model: Checklist Manifesto

Incubator model: YCombinators “18 Mistakes that Kill”

FMEAFailure Modes and Effects Analysis

Engineering View of Failure

Learn From Failure

Iterate

FMEAFailure Modes and Effects AnalysisAn engineering methodology to analyze and discover:

1. All potential failure modes of a system

2. The effects these failures have on the system and

3. How to correct and or mitigate the failures or effects on the system.

The correction and mitigation is (generally) based on ranking of the severity and probability of the failure.

Source: NASA Lewis Research Center

FMEABenefits

Key tool for reliability analysis

Provides detailed insight into systems interrelationships and potentials for failure.

• FMEA and CIL (Critical Items List) evaluations cross check safety hazard analyses for completeness.

If undertaken early enough in the design process by senior level personnel, can have major impact on:

• Removing causes for failures

• Developing systems that can mitigate the effects of failures.

Source: NASA Lewis Research Center

FMEAFailure Modes and Effects

Analysis

Source: NASA Lewis Research Center

Procedure Flowchart

Design

Get System

Overview

Perform FMEA, ID

Failure Modes

Establish Failure Effect

Determine Criticality

Revise Design

FMEA: Take Away for Entrepreneurs

Agile Development Methodologies

Plan out 1-4 weeks work

Improve process

Review product

Create product needs

Meet daily

Strategic planning

FMEA Take Away for EntrepreneursTraditional Development Process

• Customers only involved at beginning and end of process

• No Iterations

• Takes a long time.

• “Make-or-break”

• Rarely delivered according to plan

FMEA Take Away for EntrepreneursAgile Software Development

Early customer involvement

Welcome changing requirements

Deliver working software frequently

Business people and developers must work together

Face-to-face conversation.

Working software is the primary measure of progress.

Agile processes promote sustainable development.

Continuous attention to technical excellence and design enhances agility.

Self-organizing teams.

Constant tuning of processes

Agile Software DevelopmentCustomer Involvement and Rapid Iterations

•Markets•Customers•Biz Models•Strategy•Portfolios•Funding

•Customers•Sales•Marketing•Support•Upgrades•EOL/EOS

Jim Collins

“How the Mighty Fall: and Why Some Companies Never Give In”

How the Mighty Fall

Adapted from: Jim Collins, “Hoe the Mighty Fall and Why Some Companies Never Give In”

Stage 2: Undisciplined

pursuit of more Building from

stage one is people chasing goals that take

them away from their core, their

competitive advantage all in

the name of growth, or the

grand strategy.

Stage 3Denial of risk

and peril chasing things

that are not part of your core, fail to see the

problems..

Stage 4: Grasping for salvation

The silver bullet, abandoning the

flywheel and chase things outside the

core. Stage 4: Grasping for salvation

The silver bullet, abandoning the

flywheel and chase things outside the

core.

How the Mighty Fall

Stage 1Hubris Born of

Success

Stage 2Undisciplined

Pursuit of More

Stage 3Denial of Risk

and Peril

Stage 4Grasping for

Salvation

Stage 5Capitulation to Irrelevance or

Death

Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”

•Arrogance•Entitlement•Lose sight of what made success•Role of luck

How the Mighty Fall

Stage 1Hubris Born of

Success

Stage 2Undisciplined

Pursuit of More

Stage 3Denial of Risk

and Peril

Stage 4Grasping for

Salvation

Stage 5Capitulation to Irrelevance or

Death

Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”

•Overreaching•Stray from disciplined creativity•Leaps into unknown

How the Mighty Fall

Stage 1Hubris Born of

Success

Stage 2Undisciplined

Pursuit of More

Stage 3Denial of Risk

and Peril

Stage 4Grasping for

Salvation

Stage 5Capitulation to Irrelevance or

Death

Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”

•Ignore negative data•Spin•Outsized risks•Risk denial

How the Mighty Fall

Stage 1Hubris Born of

Success

Stage 2Undisciplined

Pursuit of More

Stage 3Denial of Risk

and Peril

Stage 4Grasping for

Salvation

Stage 5Capitulation to Irrelevance or

Death

Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”

•Previous risks become apparent•“Radical transformation”•“Cultural revolution”

How the Mighty Fall

Stage 1Hubris Born of

Success

Stage 2Undisciplined

Pursuit of More

Stage 3Denial of Risk

and Peril

Stage 4Grasping for

Salvation

Stage 5Capitulation to Irrelevance or

Death

Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”

•Accumulated setbacks•Eroded financial strength•Abandon hope

How the Mighty Fall

Stage 1Hubris Born of

Success

Stage 2Undisciplined

Pursuit of More

Stage 3Denial of Risk

and Peril

Stage 4Grasping for

Salvation

Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”

Recovery and

Renewal

The Background: Deal at Philips

Corporate venture capital and strategy for a major global consumer electronics player

DeliverablesStrategic plan unifying disparate unitsHigh impact strategic venture capital investmentsForge strategic alliancesDevelop transformative vision of industry futureVisionary “projects on the edge”

Background: Deal at Philips

About Scenario Planning

Scenario Planning: An Overview

TODAY

+10%-10%

Forecast Based PlanningKnowns and trends

Knowns

Scenario Planning: An Overview

TODAY

+10%-10%

Forecast Based PlanningKnowns and trends

Knowns

TODAY

Scenario Based PlanningUnknowns and uncertainties

Unknowns

Unknowns

UnknownsKnowns and trends

Scenario Planning: An Overview

Scenarios are alternative visions of the future

Scenarios are generated by analysis of what we don’t know, not just what we do

Scenarios are used to envision and “try out” multiple futures

Scenarios are used to work backwards in time to today TODAY

Scenario Based PlanningUnknowns and uncertainties

Unknowns

Unknowns

UnknownsKnowns and trends

Rethinking Industry Dynamics

CONFIDENTIAL - 28

• Philips has a sophisticated way of planning for the future when operating in a mature industry environment

• But there are emerging forces that threaten to disrupt--and recycle-- the entire industry, and the current view of dynamics

• Forecast-planning is sufficient for a mature industry. But it’s inadequate when industry transformation is taking place

Embryonic Growth Mature Aging

Indu

stry

Sa l

es

Time

Breaking Out of our Preconceptions

They are stories that help suspend disbelief in possible futures

We have a tendency to fixate on one future, or at most, two

Scenarios are a powerful tool for forcing us to abandon previously fixed ideas

Scenario-based planning allows managers to deliberately try to break the rules of their business

Scenarios are about the world, not about us

How they help usThey enable us to “practise” for different futures

They are a tool for envisioning, not predicting

They suggest the strategies, deals and alliances that we would need to prosper in different worlds

The process of creating scenarios makes you smart about a space

Scenarios Tool for embracing uncertainty

Tool for play & provocation

Tool for envisioning value creation & migration

Tool for upsetting the world

(within our minds & outside)

& strategic transformation

Checklist Manifesto

Checklist ManifestoAtul Gawande

Checklists allow one to manage complexity and cognitive overload.

Roots in aviation industryWide use in medicine emerging

Checklist ManifestoChecklists are the means, during complex situations, to

consistently apply the knowledge that is available in our minds but that we might forget to use.

Checklists permit us to manage the assembly and integration of knowledge that is held by different members of an enterprise when facing a complex situation.

Just A Routine Operationhttp://www.vimeo.com/970665

Checklist ManifestoObjections

Call for a broad checklist regime would be counterproductive — fraught with all the dangers of bureaucracy

Spontaneity and imagination are important in many jobs

Checklist Manifesto

YC’s 18 Reasons Startups Die as Checklist?

 

Redefining Failure

Seth Godin

 Common Types of Failure

Seth Godin

Design Failure. If your product or service is misdesigned, then people don’t understand it, don’t purchase it, or may even harm themselves when they use it, and you have failed.

Failure of Opportunity. If your assets are poorly deployed, ignored, or decaying, it’s as if you are destroying them, and you have failed.

Failure of Trust. If you waste stakeholders’ goodwill and respect by taking shortcuts in exchange for short-term profits, you have failed.

Failure of Will. If your organization prematurely abandons important work because of internal resistance or a temporary delay in market adoption, you have failed.

 Common Types of Failure

Seth Godin

Failure of Priorities.

If your management team chooses to focus on work that doesn’t create value, that’s like sending cash directly to your competitors, and you have failed.

Failure to Quit.

If your organization sticks with a mediocre idea, facility, or team too long because it lacks the guts to create something better, you have failed.

Failure of Respect.

If you succeed without treating your people, your customers, and your resources with respect and honesty, you have failed.

Failure to See.

And, of course, the most self-referential form of failure is the failure to see when you’re failing

END

Learning From Failure

“Fast Failure”

Learning From Failure

IdeaInception

The Traditional The Traditional WayWay

Learning From Failure

IdeaInception

Create/Evaluate Alternative

Approaches

The Traditional The Traditional WayWay

Learning From Failure

IdeaInception

Create/Evaluate Alternative

Approaches

ChooseAlternative

The Traditional The Traditional WayWay

Learning From Failure

IdeaInception

Create/Evaluate Alternative

Approaches

ChooseAlternative

Build Full Product

and

Go To Market

The Traditional The Traditional WayWay

Learning From Failure

IdeaInception

Create/Evaluate Alternative

Approaches

ChooseAlternative

Build Full Product

and

Go To Market

The Traditional The Traditional WayWay

Range OfOutcomes

Learning From Failure

IdeaInception

Create/Evaluate Alternative

Approaches

ChooseAlternative

Build Full Product

and

Go To Market

The Traditional The Traditional WayWay

Feedback Too LateNo Resources left

No Fallback PositionNo Useful Learning

Range OfOutcomes

“Fast Failure”

Failure = Normal = Good. Reward excellent failure. Punish mediocre success.Fail faster. Succeed sooner.Fail. Forward. Fast.Educate for Risk-taking, Creativity, Independence.The Great ComebackVideo Link Source: Tom Peters

The “New” WayThe “New” Way

“Fail Early and Often”

Theory of Small FailuresTest components, not the whole thingControl the environment – don’t risk everything,

e.g. small test marketsExpect failureGain feedbackRedesign componentEmbrace market reality by testing assumptions

against realitiesSave resources for fallback position!

The “New” WayThe “New” Way

Intelligent, Fast Failure

Inception

The “New” WayThe “New” Way

Intelligent, Fast Failure

Inception

Idea Genera

tion

Rapid Prototyping

The “New” WayThe “New” Way

Intelligent, Fast Failure

Inception

Idea Genera

tion

Rapid Prototyping

Choose

The “New” WayThe “New” Way

CustomerFeedback

CustomerFeedbackc

CustomerFeedback

Intelligent, Fast Failure

Inception

Idea Genera

tion

Rapitd Prototyping

Choose/Test

Choose/Re-Design/

Re-Test

CustomerFeedback

The “New” WayThe “New” Way

CustomerFeedback

CustomerFeedback

CustomerFeedback

CustomerFeedbackc

CustomerFeedback

Intelligent, Fast Failure

Inception

Idea Genera

tion

Rapid Prototyping

Choose/Test

Choose/Re-Design/

Re-Test

Go To Market

Range OfOutcomes

The “New” WayThe “New” Way

CustomerFeedback

CustomerFeedback

CustomerFeedback

CustomerFeedback

CustomerFeedbackc

CustomerFeedback

Intelligent, Fast Failure

Inception

Idea Genera

tion

Rapid Prototyping

Choose/Test

Choose/Re-Design/

Re-Test

Go To Market

Range OfOutcomes

Fallback Strategy

The “New” WayThe “New” Way

CustomerFeedback

CustomerFeedback

CustomerFeedback

CustomerFeedback

CustomerFeedbackc

CustomerFeedback